CONFIDENTIAL

7. The Commission are seeking privileges and immunities for the Office in Hong Kong on a diplomatic scale, ie commensurate with those of the Delegation in Beijing. They argue that this is not a narrow question of protocol, but vital to establishing a Hong Kong-EC relationship which might continue through the 1997 transition as an expression of Hong Kong's autonomy in economic

affairs and the Community's competence in the same area. They are also seeking assurances for the situation post-1997.

Hong Kong's Position

8.

Hong Kong cannot grant diplomatic privileges and immunities because Hong Kong can only have consular-type relations. And the Commission cannot be granted privileges under Hong Kong's Consular Ordinance (CAP 259) as the Commission is not a sovereign state. Hong Kong therefore proposed that the office should be granted privileges under CAP 190, which deals with International Organisations.

9.

The Commission have not accepted this. They claim that the

EC is not an International Organisation (although they have

recently indicated a willingness to fudge this point). More importantly, the privileges and immunities available under CAP 190 are less that those of CAP 259. In order to grant the equivalent of all the CAP 259 privileges and immunities, Hong Kong would have to enact new legislation. They have refused to do so, on the grounds that it would take too much time and require consultation with the Chinese.

10.

When the Governor visited Brussels in April, he indicated to President Delors that Hong Kong would try to bridge the gap by

Administrative measures. Their latest offer covers many of the points raised by the Commission (both at Annex A), including the inviolability of the pouch. But the Commission were not content.

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CONFIDENTIAL

ASIA-PACIFIC/1207.HKsub

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